Hi, IT WORKED!
Please try i8042.noaux=1. You say you're using a serial mouse in your other e-mail, so the system may not have an AUX port yet the kernel thinks it does. This may cause the keyboard to stop responding.
command line "linux-new init=/bin/bash i8042.noaux=1 atkbd.reset=1" booted 2.6.8.1 kernel with working keyboard. reset succeded. If AUX port is what not-keen-on-hardware people call PS/2 port, the problem is solved. my mainboard has damaged PS/2 port - it is detected but it does NOT work. Thanks for paying attention.
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